Aug. 30 (Bloomberg) -- German retail sales unexpectedly
fell for a second month in July, signaling an uneven recovery in
Europe’s largest economy.

Sales adjusted for inflation and seasonal swings dropped
1.4 percent from June, when they declined 0.8 percent, the
Federal Statistics Office in Wiesbaden said today. Economists
predicted an increase of 0.6 percent, according to the median of
27 estimates in a Bloomberg News survey. Sales climbed 2.3
percent from a year earlier.

Germany’s Bundesbank said this month that the economy will
“normalize and stabilize” in the rest of the year after gross
domestic product surged 0.7 percent last quarter. The expansion
followed a stagnation in the first quarter when a colder-than-usual winter curbed output. Inflation in food prices, which
climbed 5.7 percent in July from a year earlier, may have
reduced spending, according to Christian Schulz, senior
economist at Berenberg Bank in London.

“Higher food prices tend to lead to a bit of downward
pressure on consumption,” Schulz said before the report.
“Everything else looks positive. If you look at any business
survey, there’s acceleration, not deceleration, of growth in
Germany.”

German business confidence as measured by the Ifo institute
rose to the highest level in 16 months in August, and the ZEW
index of investor sentiment climbed to the strongest since
March. While GfK SE’s gauge of consumer confidence for September
unexpectedly dropped, it remained near a six-year high. The
nation’s jobless rate of 6.8 percent is near a two-decade low.

Chancellor Angela Merkel seeks a third term as Germany’s
leader on Sept. 22 on the strength of shielding her country from
the worst effects of the euro area’s debt crisis. Her Christian
Democratic-led bloc has about 40 percent support, compared with
25 percent for the opposition Social Democrats led by Peer
Steinbrueck, according to polls by Emnid.